Value Proposition Clear Line of Sight to Long-term Value Creation Dividend + Profitable Growth = Value Creation CREATING VALUE Exposure to Early Growth & Cost Management & Stage Development Strategic Income Capital Discipline of…
Unique Strategy Risk Managed Value Creation is Central to ARCs Strategy Targeting net debt to funds Operating costs reduced by from operations between 30% since 2009: 1.0 1.5x 10.19/boe in 2009 7.18/boe in Q3 2015 200%…
Corporate Profile Corporate Summary Production (Q3 2015) 107,261 boe/day Reserves (2P Gross YE 2014) (1) 673 MMboe Reserve Life Index (2P) (1) 16 years (2) Annualized Dividend 1.20 per share Annualized Returns (3) Since Inception 14%…
Risk Managed Value Creation Montney Assets Have Delivered Long-Term Profitable Growth and Value 140,000 Production Profile 120,000 100,000 Forecast 80,000 boe/day 60,000 40,000 20,000 0 Non-Montney…
Reserve Replacement 200% or Greater Reserve Replacement Over the Past Seven Years Montney assets have been the centrepiece to ARCs strategy of organic reserves and resources growth and provide continued upside potential
Committed to a Dividend ARC Has Always Paid a Dividend While Delivering Profitable Growth 14% annualized total return since inception, 5.6 billion of dividends (32.08/share) 6 120% Cumulative Dividends and Historic Payout Ratio 5…
Priorities Balancing Inflows and Outflows for Long-Term Sustainability Objective to fully fund ARC's Dividend and Sustaining Capital from Funds from Operations (FFO) over the long term Profitable Growth Capital will be funded from…
Sustaining Capital Superb Capital Efficiencies Drive Low Sustaining Capital Requirements 120,000 boe/day 450MM Forecast Forecast Production Sustaining Capital 25,000 boe/day Non-Montney 150MM (Capital Efficiency: 24,000/boe/day)…
Operating Efficiencies ARC Continues to Drive Down Operating Costs as It Grows in the Montney Total per boe operating costs have decreased 20% (2010 to 2015 YTD) Montney per boe operating costs have decreased 25% (2010 to 2015 YTD)…
Cost Management Low Cost Producers Deliver Superior Returns Over Time Focused assets, characterized by high working interest, operatorship and ARC owned and operated facilities, provide control over costs and operations Three Year…
Growing Our Low Cost Gas Business 14% CAGR(1) Total Natural Gas Production 2009 2016 Forecast ARC divested of certain non-core, non-Montney shallow gas assets in 2014 and 2015 with associated production of approximately 4,800 boe/day…
Long-Term Value Creation Clear Line of Sight to Future Value Creation 2015 2016 2017 2018+ 113,000 115,000 boe/d Growing Profitable 119,000 124,000 boe/d Production 124,000 boe/d Dawson, Sunrise, Parkland/Tower, Ante New Sunrise…
Montney Assets
Our Conviction in the Montney Strengthens Strong Value Creation Continuous improvement in well production performance Multiple layer development drives operational efficiency Diverse product mix allows optionality Huge long-term…
Montney Growth Assets ARCs Core Montney Properties Three Super Areas Proximity of ARC Montney landbase within Super Areas enables: Capital & Operating Efficiencies Application of Learnings across Areas Greater Flexibility in…
Montney Infrastructure Dual-Connected ARC Facilities Allow for Takeaway Optionality TCPL Area is currently well Spectra served with three major Alliance pipelines providing TCPL Proposed access to North American markets ARCs…
Multiple Layers to Develop Significant Future Delineation Opportunities Attachie Septimus Sunrise Tower Parkland Dawson Pouce Coupe Montney A Upper Montney Montney B Montney C Lower Montney Montney D Montney…
NE BC Montney Schematic Multiple Layers, Multiple Targets, Massive Opportunity Not to scale.
NE BC Montney Reserves & Resources NE BC Montney TPIIP 67.4 Tcf of Gas and 2.3 Billion Barrels of Oil 2014 Resource evaluation conducted by GLJ saw significant growth in Gas TPIIP, which is mainly attributed to newly-acquired land in…
Montney Development Economics Strong Rates of Return Across the Montney Portfolio Tower Dawson Sunrise Ante Creek Half Cycle Economics C55/bbl 45% IRR 100% IRR 60% IRR 35% IRR MSW 2.6x Recycle Ratio 5.2x Recycle Ratio 5.6x…
North American Gas Plays Supply Costs Montney is Extremely Competitive Against Other North American Gas Plays Source: RBC Capital Markets Montney Evolution Playing the Long Game October 2015. 15% before-tax IRR assumes US/Cdn is…
Tower is Among the Best Oil Plays Strong Oil Economics at Tower Source: CIBC reports, CIBC World Markets Inc.
Dawson Heart of the Montney Low Cost Superior Significant Gas Economics Resource Op Cost 3.84/boe 100% IRR 13.7 Tcf C55/bbl & C3/GJ of gas resource F&D 0.65/Mcf Capital Breakeven Efficiency Price 5,000/boe/day 1.25/Mcf…
Dawson A Cash Flow Machine Low Reinvestment Ratio to Maintain Significant Free Cash Flow Field Netback ( millions) Capital Expenditures ( millions) 250 250 Free Cash Flow ( millions) 200 Production (MMcfe/day) 200 150 150…
Dawson Gas Type Curve Growth Continuous Improvement in Well Performance 7,000 Key Metrics 2016 Budget 6,000 2015 Type Curve DCET Capex/well ( millions) 4.2 2013/2014 Type Curve Internal 2P Reserves (Bcfe) 7.4 5,000 2009-2011…
Dawson Natural Gas Liquids Potential Finding Higher Liquids With Move Away from Dawson Core Liquid ratio at Dawson 70 bbl/MMcf varies across Upper and Wellhead 30 bbl/MMcf Condensate Lower Montney Wellhead (after 4 months…
Dawson Phase III Plant Full Regulatory Approval Obtained in Q3 2015 Dawson Phase III Sour Gas Plant with 90 MMcf per day of gas and 7,500 barrels of liquids- handling sales capacity approved by the BC Oil and Gas Commission in…
Dawson Phase III Project Economics From Well Economics to Project Economics Well Economics Include drill, completion, wellsite equipment and pipeline from well to gathering system Standalone after-tax economics*: IRR = 100%, Recycle…
Parkland/Tower Significant Value Creation Strong Growth Exceptional Economics Driver Results 45% IRR (Tower) 95% Forecast YoY 7 wells with over 100,000 C55/bbl & C3/GJ 2016 liquids growth barrels of cumulative oil production in…
Parkland/Tower Development Potential Incremental Reserves Potential with Multilayer Development Upper Montney A Booked Reserves* Upper Tower Montney 42 Hzs drilled Parkland 70 Hzs drilled Wells Lower Tower Upper Montney…
Tower Cumulative Production Continuous Improvement in Type Curve Cumulative oil production from nine 2014 wells approaching one million barrels Total Production Oil Production 280,000 160,000 260,000 140,000 240,000 220,000…
Tower Wells Deliver Outstanding Results ARCs Tower Wells Are Some of the Best in Western Canada Cumulative Production Increasing Majority of wells never produce 100,000 barrels Days on Production Increasing Source: AltaCorp…
Tower Completions Advancement Advanced Completion Design = Improved Performance 1,400 1,400 Key Metrics 2016 Budget 2014 Type 2016 Curve Type Curve DCET Capex/well ( millions) 5.5 2015 Type Curve 1,200 1,200 2015 Type Curve…
Tower Drilling Curves 25% Reduction in Drill Times = 30% Cost Savings at Tower Pads 0 12-16 Best Well 30% cost savings and 25% 8-24 Pad Average reduction in drilling time over previous Tower pads 500 12-16 Pad Average (Horizon…
Sunrise Long-term Growth Opportunity Significant Strong Four Layer Resource Economics Development 6.6 Tcf 60% IRR Currently producing of gas resource C55/bbl & C3/GJ from all four layers 2015 Growth Breakeven Low Cost Driver…
Sunrise Development Potential Proven Productivity from Four-Layered Development 21 Hzs drilled Drilling Inventory 500 Upper Montney A Booked Reserves* 450 Upper 400 Montney 350 12 Hzs drilled 300 Wells Upper Montney…
Sunrise Outperforming Expectations Drilling Results Continue to Reaffirm Four-Layer Development Model 2015/16 Upper MTY Type Curve (11.7 Bcf) 10,000 2013/14 Type Curve (11 Bcf) 9,000 02-26-78-18 W6 (08-24Hz) Upper MTYA 8,000…
Sunrise Continuous Improvements Enhanced Well Design = Type Curve Improvement 7,000 2014-16 Type Curve (11.5 Bcf) Key Metrics 2016 Type Curve 6,000 2013 Type Curve (11 Bcf) DCET Capex/well ( millions) 5.4 2011 Type Curve (7 Bcf)…
Sunrise Phase II Project Economics From Well Economics to Project Economics Well Economics Include drill, completion, wellsite equipment and pipeline from well to gathering system Standalone after-tax economics*: IRR = 60%, Recycle…
Strategic Montney Infrastructure Building Montney Infrastructure to Support Resource Development Parkland Gas Plant On-Stream 2013 Tower Battery October 2015 Dawson Gas Plant Phase I: On-Stream 2010 Phase II: On-Stream…
Greater Dawson Montney Pilots Proving Future Value Before Full-Scale Development Septimus Pouce Coupe Pilot production Lower Montney on-stream since pilot production Q2 2014 on-stream since late 2013 Parkland Dawson Lower…
Greater Dawson Lower Montney Fairway Building Understanding of the Lower Montney Fairway Parkland 11-36 Pouce 1-15 Dawson 1-17 Dawson 8-1 Sunrise C2-25 Sunrise B8-24 Only Lower Montney wells are displayed.
Attachie Pilots Continued Evaluation on Liquids-Rich Land Two pilot horizontal wells on western side of lands have produced 1.4 Bcf of gas and 130 Mbbl of liquids in 18 months NGLs yield up to 25 bbl/MMcf dependent on plant design;…
Financial Strategy Financial Discipline Provides Optionality FINANCIAL DISCIPLINE Strong Balance Stable and Prudent Funding Opportunistic Manage Risk Sheet & Simple Meaningful of Capital Acquisitions and and Preserve Capital…
Balance Sheet Strength Targeting Net Debt to Funds from Operations Between 1.0 1.5x (1) 180M Ante Creek acquisition in December 2009 was financed by 240M equity issuance that closed in January 2010. (2) 2015F Net Debt and 2015F FFO…
Profitable Investment Managing a Profitable Business Through Cycles ARCs high-quality assets, excellent capital efficiencies, and low operating costs have resulted in strong returns over the long term ARC has realized earnings of 4…
Significant Liquidity Q3 2015 Net Debt and Cash Balance 2.5 Billion Total Cash & Existing Credit Capacity (1.4 Billion Available) Bank Credit Facility Cash 205MM 1 billion credit facility plus 40 million Undrawn Master working…
Hedging Program Results Hedging Continues to Smooth Cash Flow Volatility ARCs hedging program continues to provide greater certainty of cash flows and supports the business plan Realized Hedging Gains (Losses) 200 Crude Oil Natural…
Looking Beyond 2016 Diverse Portfolio Provides Strategic Optionality ARC has a well balanced inventory of value creating opportunities which may be pursued beyond 2016 140,000 Production Profile Project Options 2016 - 2020+…
Q3 2015 Operational and Financial Performance Strong Production and Financial Results Three Months Ended Nine Months Ended September 30 September 30 (Cdn millions, except per share and per boe amounts) 2015 2014 2015 2014 Production…
2015 and 2016 Guidance Focused on Value Creation 2015 Guidance (1)(2) 2015 YTD Actuals 2016 Guidance Oil (bbl/day) 33,500 - 34,500 32,379 34,500 - 36,500 Condensate (bbl/day) 3,400 - 3,800 3,363 3,200 - 3,600 Gas (MMcf/day) 435 -…
Natural Gas Commodity Marketing Diversified Sales Points and Purchasers of ARCs Natural Gas Secured firm transportation pipeline agreements to support existing production and future development until 2019 50% of Station 2 exposure…
Crude Oil Commodity Marketing Focused on Condensate, Light and Medium Crude Oil Secured firm transportation pipeline agreements to support existing production and future development Maintain control into liquid market hubs to ensure…
NGLs Commodity Marketing NGLs Pipeline & Fractionation Capacity Secured ARCs NGLs Exposure NGLs Pricing NGLs revenue (4,000 bbl/day) North American NGLs supply growth makes up 1% of ARCs revenue continues to put downward pressure on…
Hedge Positions November 4, 2015 Summary of Hedge Positions as at November 4, 2015 (1) Q4 2015 2016 2017 2018 2019 (2) Crude Oil Cdn WTI Cdn/bbl bbl/day Cdn/bbl bbl/day Cdn/bbl bbl/day Cdn/bbl bbl/day Cdn/bbl bbl/day Ceiling 81.27…
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